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Can NAMAs Overcome The CDM

Eva Filzmoser

The Clean Development Mechanism has failed to live up to its potential, and many now look to Nationally Appropriate Mitigation Actions to succeed where the CDM failed. Carbon Market Watch says that NAMA proponents can learn plenty from the CDM’s successes and its failures.

The Kyoto Protocol’s Clean Development Mechanism has failed to deliver the kind of sustainable development benefits that many believed it would, and many now look to Nationally Appropriate Mitigation Actions to succeed where the CDM failed. Carbon Market Watch says that NAMA proponents can learn plenty from the CDM’s successes and its failures.

NOTE: This article originally appeared in the Carbon Market Watch newsletter. The views are those of Carbon Market Watch and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates. You can view the original here.

9 October 2013 | At the UNFCCC negotiations in Bali in 2007, developing countries agreed to develop nationally appropriate mitigation actions (NAMAs). NAMAs aim to reduce greenhouse gas emissions while also achieving sustainable development and poverty reduction objectives. NAMAs have been loosely defined and can include individual mitigation projects and actions or comprehensive sector-wide mitigation programs.

NAMAs are often divided into three broad categories:

  • Unilateral NAMAs implemente and financed by the host country itself
  • Supported NAMAs: implemented by the host country with financial aid from a developed country
  • Credited NAMA: implemented by the host country with financial aid from a developed country who received carbon credits in return. This third category is controversial because it raises numerous double counting issues and it is unclear how such credited NAMAs would be different from the CDM

Both NAMAs and the CDM aim to deliver sustainable development benefits. However, an important difference is that the CDM focuses mainly on the mitigation potential of projects because carbon credits are only issued for emissions reductions achieved and do not depend on the contribution to sustainable development. The understanding for NAMAs on the other hand is a primary focus on sustainable development with greenhouse gas reduction rather a secondary goal.

Given that the NAMA implementation is still at early stages, NAMAs provide an opportunity to better implements requirements for sustainable development than has been the case in the CDM.

Why the CDM has Failed to Deliver

Numerous studies and anecdotal evidence show that many CDM projects fail to deliver sustainability benefits. The reasons for this are manifold. Sustainability benefits have no financial value in the current system, as only greenhouse gas benefits result in monetary compensation through the generation of offset credits. Another reason is that host countries define their own sustainability criteria. Developing countries rejected attempts to establish an international sustainability assessment process, arguing that it would violate their national sovereignty. It is in the interests of the host country to secure as many CDM projects as possible because of the investment they bring. This means that host countries have little incentive to require strong sustainability criteria that could dampen investment. The sustainability criteria therefore usually lack specificity, transparency and stringency.

Also, the assessment process that is performed by the host country Designated National Authorities (DNAs) is usually perfunctory. Even in the few countries that have well developed sustainability requirements, the requirements are undermined by the lack of monitoring, reporting, and verification of claimed sustainability benefits. Experience shows that for these reasons, the majority of offsets are coming from projects with arguably little or no sustainable benefits, such as industrial gases and large hydro projects and sometimes even negative impacts of registered projects.

Missing: Where is the voluntary sustainable development reporting tool?

tools

As a response to demands to improve the contribution of CDM projects to sustainable development, the CDM Executive Board adopted a voluntary tool to highlight sustainable development (SD) co-benefits of CDM projects in 2012.

The tool has been heavily criticized for being ineffective because of the absence of monitoring and verification, the voluntary nature of the tool, and the fact that only project participants and coordinating/managing entities (CMEs) are able to use the tool undermine the legitimacy of the SD tool and limit its utility as a reporting tool. The absence of any third party verification or for the lack of opportunity for local communities to provide comments limits its utility as a reporting tool and undermines the legitimacy of the SD tool.

Although the SD tool was adopted almost a year ago, there is no information about whether the tool has been made operational or whether project participants are actually using it. This delay in implementation could suggest that there is little demand from project participants to use the voluntary reporting tool. It seems that the only stakeholders interested in the tool are civil society organisations that have an interest in CDM projects delivering sustainable development benefits and not having negative impacts. Unfortunately this is not something that the SD tool is able to monitor.

Lessons From the CDM for NAMA’s Contribution to Sustainable Development

Over the last two years, developing countries have started to develop NAMAs. Numerous developing countries have started to develop proposals and a number of developed countries, including Germany, Denmark, Canada and Norway, are providing funding to support the development of NAMAs.

The NAMA Partnership was established to share information and knowledge and to deliver know-how in support of developing countries. It includes multilateral organizations, bilateral cooperation agencies and think tanks.

The NAMA Partnership has set up a working group on sustainable development that focuses on identifying and developing clear links between mitigation actions and sustainable development. It works on developing tools and approaches to assess the contribution of the NAMAs to sustainable development, the link of sustainable development with national development objectives and the contribution of NAMAs to achieve national emission targets.

Carbon Market Watch welcomes the focus on sustainable development of this working group. If done well, the tools that will be developed may help overcome some of the shortcomings and challenges faced by the CDM. Issues that need to be addressed by the working group include setting criteria and indicators for sustainable development, how to monitor and report on these indicators and how to involve stakeholders, especially local communities in the process.

Lessons from the CDM for NAMAs to Alleviate Poverty

Waste management is a key area for NAMA development. In many parts of the developing world, collecting and sorting waste informally provides a livelihood for large numbers of the urban poor, especially women and children. People working in the informal recycling sector often suffer from harsh working conditions and are exposed to many health hazards. There is evidence that where waste collectors are organized, and operate within a more favorable policy climate, they are able to achieve a decent standard of living and improve their health and social standing. In sectors where local communities are typically active, it is therefore essential to involve them in the development and implementation phases of the NAMA.

Experience from the CDM shows that the absence of social safeguards and weak rules, such as the current CDM rules for local stakeholder consultation can lead to the registration of harmful projects. Given the priority objectives of NAMAs to achieve sustainable development and to reduce poverty, it is therefore crucial to take into account the lessons learnt from the CDM and to establish a set of guidelines to ensure thorough public participation process. This must include consultation with indigenous and tribal peoples and local communities before adopting measures that may affect them. A public participation process is essential for individual mitigation project NAMAs as well as for sector-wide mitigation NAMA initiatives.

NAMAs provide unique opportunities to achieve emissions reductions, sustainable development and poverty alleviation at the same time. It is therefore essential to look at the lessons learnt from the CDM. Many challenges the CDM is facing are relevant for NAMAs. These include first and foremost a designing and implementing effective public participation processes and rules and guidelines on how to quantify, verify and monitor sustainable development benefits. If NAMAs achieve to address these issues, they may help to deliver the triple benefit of climate mitigation, sustainable development and poverty alleviation.


Eva Filzmoser is the Director of Carbon Market Watch, which she founded as CDM Watch in 2009. Before that, she worked at the European Commission, as a consultant on EU and UN climate policy and for several non-profit projects in developing countries. She can be reached at Eva.Filzmoser@carbonmarketwatch.org.
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